The upcoming discussion will update you on the difference between the official and operative objectives of a company.
Difference between Official and Operative Objectives of the Company
Official objectives, also termed as organisational objectives or corporate objectives, are those that are made known to anybody including outsiders through public statements. In the case of a company formed under the company law in India, the Memorandum of Association incorporates an ‘objects clause’. From legal point of view, this clause is ascribed the highest importance as a large number of persons including the public are interested in it. The basic objectives stated in this clause are official objectives.
Operative objectives are established for each of the areas of the company’s operations. Marketing operations, for example, will have objectives detailing the kind and degree of expansion wanted, and production, personnel, finance and accounting will also be their own objectives. Each of these operative objectives need to be achieved if the company’s overall official objective is to be achieved.
Operative objectives (also termed sub-objectives or functional objectives) differ in many ways from the official overall objectives.
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First, they are often (though not always) quantitative, whereas the official objectives are not. For example, an official objective may state that the company operations are to be ‘profitable,’ whereas financial objective will spell out the desired ROI.
Second, operative objectives are more limited in scope, for they deal with only one area of operation.
Third, operative objectives will be established by middle managers, whereas official objectives by the top management who give overall strategic directions to the managers.
Four, operative objectives are the ‘ends’ actually sought by the functional units, whereas official objectives are those ‘ends’ which a company seeks to achieve.